Cash Transfer Actors in Nepal – NRCS mapping exercise
March 2015
Background
Each year Nepal faces a series of natural disasters, including floods, landslides and food
insecurity, causing immense hardship and challenges to communities in the affected
districts. The Nepal Red Cross Society (NRCS) as the auxiliary to the government is first
responder to the needs of the affected households. Whenever a natural disaster occurs,
such as a flood or landslides, resulting in house damage or destruction, the normal
channel of relief support from NRCS is in-kind, providing household kits, food and other
non-food items. Whilst this intervention has proved effective, this type of humanitarian
assistance is now under review, with alternative response mechanisms being considered.
The NRCS has embarked on a process to improve their emergency response capacity to
meet the needs of disaster-affected populations. To include (but not restricted to)
strengthening the processes, systems and knowledge required to implement effective cash
transfer programmes. A vital component of this learning process is the development of
accurate market baseline data to improve the response analysis to articulate response
modalities and mechanisms.
The analysis below is an extract from a Household Economic Security deployment in
March, with a specific focus on the flood recovery in the south western Nepal. Even so, the
information gathered can be relevant to actors considering cash transfers as part of the
earthquake response in Kathmandu and other affected areas.
Outline of the report (revised 24 March)
1) Provide analysis on the key service providers with the potential to support a CT in Nepal. In
addition, outline key recommendations to assist NRCS in further developing their preparedness
capacity when considering or designing Cash Transfer Programmes (CTPs).
2) Provide a list key CT related contacts met during the deployment, including contact details; the
key learning’s from INGO-UN led CTPs; and finally provide guidance to strengthen inter
agency coordination for CTPs in Nepal
1. Analysis on the key service providers
When considering a Cash Transfer Programmes in western Nepal, the current options
were implemented and available to the INGO-UN sector:
a) Under the leadership of Ministry of Federal Affairs and Local development
(MoFALD), the government focuses on 21 districts for its Rural Community
Infrastructure Work (RCIW). MoFALD’s flagship social protection program, offers
temporary employment (60 to 80 days) to vulnerable households to build and/or
rehabilitate/refurbish assets such as roads, schools, basic health centres, community
buildings, river bank reinforcements, water and sanitation facilities, irrigation channels,
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bridges and culverts, foot trails, etcetera. MoFALD is looking at the WFP C&V
technology but has not used it.
b) A collaboration with the banking institutions to implement a Point of Service
(PoS) system. WFP rolled-out this service in Surkhet to support 1000+ flood displaced
HHs. They undertake Cash for Work (CfW) contracts, for a maximum of 50 days.
Payments are made every 10:10:15 and 15 days. The nominated worker within the HH
receives a card and uses a biometric system for identification. HHs is permitted to
include one additional family member to collect payments.
WFP implements RCIW in 8 of those 21 districts: Dailekh, Jumla, Kalikot, Humla,
Bajhang, Bajura, Achham, and Mugu. In those 8 districts, WFP uses a standard
arrangement, whereby they team up their cooperating partner (SAPPROS, HCDA, and
MDI) with a (local) bank (e.g. NIBL or NMB bank).
WFP negotiate with banks and they charge a fee for the whole operation, which we
pay in instalments, following the instalments of the cash transfer program. The bank
charges its fee (which I can’t disclose because this is confidential/competitive contract
information) in four instalments – thus it’s not per transaction. It’s a negotiated fee for a
whole lot of transactions based on the circumstances, scope of the program.
c) Using a bank/remittance company to organise payments. In Bardia district, Oxfam
negotiated with the remittance company IME to pay flood affected HHs at the bank.
IME was selected (they are a partner of Global Bank), as they were the closest
banking institution in the target area. HHs were paid for CfW activities, every 12 days.
Oxfam’s partners agency provided the bank with a master list of HHs and this list was
presented on payment days, and monitored by the partner. Oxfam paid the bank a 1%
service fees. There is a recognition that the scale of the CT programme has to be
significant enough to be worthwhile for a bank. Stressing the importance of
coordination between actors planning to work with banks.
Note independent remittance companies are located throughout all districts and are
extremely effective with payments. Crucially, they have the general trust of the sender and
receiver. The sender (in the Gulf/Malaysia) is charged NRs 200 for transfers up to NRs
25,000 and NRs 300 for transfers between NRs 25,001-100 K
d) Cash in an envelope. By far the most common mechanism of payment and used by
WFP, the INGO Consortium in Surkhet for CfW projects and by NRCS for their pilot
shelter construction project. Often this is the most practical option, given the significant
distances between districts centres and some of the affected VDCs (one targeted VDC
Neta is 50 kms from Birendranagar). Few banks have sub-branches in the districts,
making HHs travel vast distances as counter-productive
e) The exception (in Surkhet) is the Citizens Bank. They have 54 branchless agents in
the 49 VDCs. Citizen Bank has a contract with the Government (DDC) to pay 25,000
HHs in the district their social welfare/pension payments every 4 months. They provide
a PoS biometric service, only to the registered person. This service is extremely
effective, however it has limitations: a) dependent on mobile communications to work
effectively. The bank has 3 Sims (NTC, N-Cell and CDMA) to maximise coverage; b)
the payments only occur over 5 -7 days every 4 months and does not operate outside
of this period; c) the 49 branchless banks in the district are cash poor outside of this
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payment period. Nevertheless its is a functioning system and there is scope for
scaling-up
f) Mercy Corps apparently used an Indian mobile company as a service provider to
support their CfW for the flood affected in west Nepal, along the Terai border. I did not
meet Mercy Corps staff but was informed through Oxfam. Apparently all mobile
transactions costs were NRs 40 using this system. Extremely high costs, with Mercy
Corps paying the service fee. Therefore an expensive service and hardly one that
would be embraced by cash poor communities.
Mobile Technology
NTC and N-Cell advertise mobile banking and have established partnerships with banks.
However this service is restricted to inter-bank payments between clients in that particular
bank and not payments to other banks or institutions
N-Cell and NTC will eventually rollout mobile transfers by 2016. N-Cell has had their
business plan approved but not yet endorsed by the Central Bank. This won’t be
considered until NTC present its own Business Plan. There are three key factors will
determine a successful major roll out of mobile transfers; 1) a reliable Network; 2)
establishment of Agents: 3) financial support to agents by super agents
One option that is currently operational and offers a real alternative to the 5 current
payment mechanisms highlighted, is the Hello Pisa platform. They state “Hello Pisa is a
highly sophisticated world class thoroughly tested Mobile Financial Service (MFS)
business solution designed specifically to meet the requirements of Financial institutions,
mobile Financial Service Providers and Mobile Service Providers”
Surprisingly none of the INGO –UN organisations are using the platform, despite Hello
Pisa having partnerships with 5 banks, including Laxmi Bank
In the absence of the banks not having permanent agents in the VDCs, with cash and the
mobile companies not yet operational in mobile banking, Hello Pisa is a genuine
alternative to current payment mechanisms. Most HHs own mobile phones, therefore
mobile transfers can work. The key is having agents in the VDCs who are operational and
have cash assets to pay clients. Apparently the model works effectively in the urban Terai
but as yet not expanded to the hills and rural communities
At present, inter-agency discussions for CT falls under the remit of the FS cluster. There is
certainly the appetite within the key agencies to have a national CT focal person to direct
developments in this sector. Possibly in the interim, this role could be rotated by the key
agencies currently engaged in CT activities. NRCS has the opportunity to play a pivotal
role in the development of this sector
Oxfam GB is providing technical support to the Government to develop a Guideline for
CTs, within the Relief Distributions. The completion of the guidelines will allow for
improved inter-agency dialogue and development in the sector. Otherwise the CT sector
remains in its infancy with no agency, including the UN taking the lead in developing the
sector, beyond rudimentary payment mechanisms
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2. Cash Transfer Partners and Operators: Contact details
Name
1 Kate
Alley
2 Massimo
Diana
3 Moira
Riddick
4 Ujjwal
Pokhrel
5 Kurt
Burja
6 Jean
Vanbelle
Organisation Role
UN-NRCC
Policy
Advisor
UN Res rep
Strategic
Office
Planning
Advisor
UN Res Rep NRRC
Office NRRC Advisor
UNCDF
National
Program
Coord
WFP
FSMAU
Email
Kate.alley@one.in.org
Mob
9801023421
Kurt.burja@wfp.org
9851086373
WFP
Head of the
Resilience
Unit
EFSL
Regional
Head of HR
jean.vanbelle@wfp.org
9813677063
rdhungel@oxfam.org.u
k
rdja@dca.dk
1-5544308
Massimo.diana@one.un 9801145700
.org
Moira.reddick@one.un.
org
Ujjwal.pokhrel@uncdf.o
rg
9843460017
7 Rajesh
Dhungel
8 Rita
Jayasaw
al
9 Arbin
Regmi
Oxfam
Citizens
Bank
Surkhet
Manager
Arbind.regmi@ctzbank.
com
083-520851
1 Sanjay
0 Shah
Hello Pisa
/Finaccess
Co-founder
sanjay@finaccess.com.
np
9801023824
1 Nikesh
1 Ghimire
Laxmi Bank
Kth
HeadMarketing
and Comm
Nikesh.ghimire@laxmib
ank.com
01-4444685
Developmen
t Partners
(DP) Cell
anil.chandrika@undp.or 9801062350
g
DCA
1 Anil
UNDP
2 Chandrik
a
4
9802097807